MR. JUSTICE BREWER delivered the opinion of the court.
This case is similar to the two just decided, in that it was a suit brought by this plaintiff in the same court, challenging an assessment of its railroad property for the same year, by the same board, with the same result both in the trial and Supreme Court of the State. Hence it is useless to reconsider the questions decided in those cases as to the constitutionality of the act itself, or those which depend solely upon like testimony. There was, however, in the trial of this case a more elaborate effort to show that the state board included in its assessment the value of property outside the State, and also that the valuation placed nominally upon the property within the State was largely based upon interstate business done by the plaintiff, and thus, as is claimed, to that extent, placed a direct burden upon interstate commerce, which, it is conceded, is beyond the power of the State to cast. It becomes necessary, therefore, to notice a little in detail the testimony which was received, as well as that which was excluded on the hearing.
It may be premised that there was much testimony of a character similar to that given in the other cases. Beyond that, there was a large amount of testimony received as well as some offered and rejected for the purpose of showing what was presented to the board for consideration, the method by
"Q. In the assessment of the Cincinnati, La Fayette and Chicago Railway, extending from Templeton, Indiana, to the Illinois state line," (one of the lines in plaintiff's system and included in the assessment,) "in arriving at the basis for the estimate of the value which you placed upon the main line of that road, did you consider the market value of any stocks; and, if so, of what stocks did you consider the market value?"; but the court ruled the question out on the ground that it was an attempt to inquire into the mental processes of members of the board. At the time counsel for the defendant stated:
"We desire to let the record show at this point, may the court please, that the defendant will interpose no objection to any question asked by the plaintiff as to whether or not the state board of tax commissioners assessed and valued any
The plaintiff did not, however, apparently care to take advantage of this offer. Other questions were put to the witness, like the following:
"Q. In assessing the Indianapolis and St. Louis Railroad, you placed the main track at $27,900 per mile, while you assessed the main track of the Terre Haute and Indianapolis Railroad at $21,800 per mile, being $6000 per mile less than the track of the St. Louis division of the three C.'s & St. L. or the I. & St. L. railroad. Now, in making this assessment, $21,800 per mile, or $27,900 per mile upon the main track of the St. Louis division of the three C.'s & St. L., did you or not consider the gross earnings of the three C.'s & St. L. railway, including earnings derived from carrying freight and passengers from points within to points without the State of Indiana, or through the State of Indiana, while engaged as a common carrier in interstate commerce?"; but the court sustained objections to all of them.
The witness was also asked, but not permitted to answer:
"Q. Did you fix the value upon the St. Louis division of the three C.'s & St. L. railway — I mean did the board — as returned to the auditor of State separately or did you value that road as a part of the three C.'s & St. L. system in Ohio and in Indiana, and did you, having reached a unit of value by considering the whole system, distribute that unit of value according to mileage over the operated and leased lines and parts of roads in Indiana of the plaintiff?"
Another series of questions was propounded, of which the following is one:
"Q. Did you or not, in assessing and fixing the value of the St. Louis division and of the Chicago division and of the leased and operated lines of the three C.'s & St. L. Railway in the State of Indiana, place or add anything to the value of said lines by reason of the fact that it had a franchise?"
These references are probably sufficient to fully present the questions for consideration. It will not be claimed that it is within the province of this court to review any question as to the admission or rejection of testimony which does not bear directly upon some matter of a Federal nature. It will be noticed that no testimony was ruled out showing, or tending to show, what was in fact valued and assessed by the state board. There was also direct testimony that no franchise belonging to the plaintiff was estimated in making the assessment. The inquiry, therefore, in view of the testimony received and that offered and rejected is narrowed to these two matters: First. If an assessing board, seeking to assess for purposes of taxation a part of a road within a State, the other part of which is in an adjoining State, ascertains the value of the whole line as a single property and then determines the value of that within the State, upon the mileage basis, is that a valuation of property outside of the State, and must the assessing board, in order to keep within the limits of state jurisdiction, treat the part of the road within the State as an independent line, disconnected from the part without, and place upon that property only the value which can be given to it if operated separately from the balance of the road? Second. Where an assessing board is charged with the duty of valuing a certain number of miles of railroad within a State forming part of a line of road running into another State, and assesses those miles of road at their actual cash value determined on a mileage basis, is this placing a burden upon interstate commerce, beyond the power of the State, simply because the value of that railroad as a whole is created partly — and perhaps largely — by the interstate commerce which it is doing?
With regard to the first question, it is assumed that no special circumstances exist to distinguish between the conditions
The second question must also be answered in the negative. It has been again and again said by this court that while no State could impose any tax or burden upon the privilege of doing the business of interstate commerce, yet it had the unquestioned right to place a property tax on the instrumentalities engaged in such commerce. See among many other cases, Marye v. Baltimore & Ohio Railroad, 127 U.S. 117; Pullman's Palace Car Co. v. Pennsylvania, 141 U.S. 18.
The rule of property taxation is that the value of the property is the basis of taxation. It does not mean a tax upon the earnings which the property makes, nor for the privilege of using the property, but rests solely upon the value. But the value of property results from the use to which it is put and varies with the profitableness of that use, present and prospective, actual and anticipated. There is no pecuniary value outside of that which results from such use. The amount and profitable character of such use determines the value, and if property is taxed at its actual cash value it is taxed upon something which is created by the uses to which it is put. In the nature of things it is practically impossible — at least in respect to railroad property — to divide its value, and determine how much is caused by one use to which it is put and how much by another. Take the case before us; it is impossible to disintegrate the value of that portion of the road within Indiana and determine how much of that value springs from its use in doing interstate business, and how much from its use in doing business wholly within the State. An attempt
These are the only matters which seem to distinguish this case from the two preceding, and, therefore, the judgment of the Supreme Court of Indiana is
MR. JUSTICE HARLAN and MR. JUSTICE BROWN dissented from the opinion and judgment in this case upon the grounds stated in their dissenting opinion in Pittsburgh, Cincinnati, Chicago & St. Louis Railway Company v. Backus, No. 899, ante, 421, 437.
MR. JUSTICE JACKSON did not hear the arguments in this case, or take any part in its decision.